Gov. Rick Perry Signs "Loser Pays" Bill

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Gov. Rick Perry signed into law Monday a measure that will limit frivolous lawsuits by levying some fees on plaintiffs and allowing meritless suits to be dismissed early in the process.

Perry designated the "loser pays" bill a top priority of the legislative session, saying Texas needs to crack down on junk lawsuits.

Some plaintiffs who sue and lose will be required to pay the court costs and attorney fees of those they are suing. The law also creates expedited civil actions for cases less than $100,000. It goes into effect Sept. 1.

Perry said the legislation "provides defendants and judges with a variety of tools to expedite justice for those deserving."

"Employers will spend less time in court and more time creating jobs," he said.

The law will encourage timely settlements by penalizing parties who turn down reasonable settlement offers to try to get more than they should.

Perry said the changes reduce the cost of litigation while still allowing legitimate cases to proceed. Supporters say the state's business climate will improve because the reforms will make Texas more attractive to employers looking to expand or relocate.

"HB274 signifies a major landmark in tort reform in Texas," said Rep. Brandon Creighton, the House author of the bill. "The state now has the means to dispatch suits that should have never been filed, making litigation in Texas fair and expedient."

Business groups and the Texas Medical Association, which wanted to protect doctors from frivolous malpractice lawsuits, have urged lawmakers to pass such legislation. But several trial lawyer groups and the AFL-CIO opposed the measure, arguing it would give corporations the upper hand in lawsuits and prevent some individuals with legitimate claims from filing suit.

Sen. Joan Huffman, the Senate sponsor of the bill, worked to negotiate a compromise between trial lawyer groups and businesses. The trial lawyers agreed to support the Senate version of the bill after the provision that allows judges to immediately dismiss frivolous lawsuits was added.